Uttarakhand HC allows
Revenue’s appeal, denies Sec. 10B benefit to assessee (engaged
in manufacture of handicrafts) for AY 2009-10; Notes that assessee claimed
deduction u/s. 80HHC from AYs 1992-93 to 2003-04 and u/s. 80IC from AYs 2004-05
to 2008-09 and it
started claiming deduction u/s.10B from subject AY 2009-10; Accepts Revenue’s stand that since assessee commenced business long ago in 1950, the vital requirement of Sec. 10B of allowing deduction for 10 years period from the date of commencing production, was not met; Rejects assessee’s stand that irrespective of the fact that the production was commenced much earlier, it must be treated as entitled to the benefit u/s. 10B with reference to the date on which it became a 100% EOU (i.e. in June, 2007); HC clarifies that merely getting the status of a 100% EOU would not result in a change in the date of beginning of production by the said unit; Extensively analyses CBDT Circular 1/2005 (relating to entitlement of Sec. 10B deduction to undertakings set-up in domestic tariff area [‘DTA’] and subsequently approved as 100% EOU), notes that assessee’s unit was admittedly in the DTA, observes that among the illustrations contained in the circular, illustration no. 2 is the closest to the facts of the present case, in view of which deduction is not allowable to assessee; Rejects assessee’s contention that provision in the Circular (which says that benefit would not be available beyond 2009-10 where there is a subsequent emergence of a 100 % EOU), is ultra vires to Sec. 10B proviso which purports to limit the right to claim the benefit upto the year 2012, holds that the circular must be appreciated in the context of the question which fell for consideration; Lastly, HC rejects assessee’s stand that if Revenue’s interpretation is accepted, then obtaining status of a 100% EOU is redundant and a futile exercise, re-iterates that “merely obtaining the status of a 100% EOU cannot clothe the assessee with the right to claim benefit of deduction beyond 10 years”; However, remits matter back to AO to examine assessee’s claim u/s. 80IC, distinguishes assessee’s reliance on SC ruling in Yokogawa wherein the issue was what would be the stage of deduction:HC
started claiming deduction u/s.10B from subject AY 2009-10; Accepts Revenue’s stand that since assessee commenced business long ago in 1950, the vital requirement of Sec. 10B of allowing deduction for 10 years period from the date of commencing production, was not met; Rejects assessee’s stand that irrespective of the fact that the production was commenced much earlier, it must be treated as entitled to the benefit u/s. 10B with reference to the date on which it became a 100% EOU (i.e. in June, 2007); HC clarifies that merely getting the status of a 100% EOU would not result in a change in the date of beginning of production by the said unit; Extensively analyses CBDT Circular 1/2005 (relating to entitlement of Sec. 10B deduction to undertakings set-up in domestic tariff area [‘DTA’] and subsequently approved as 100% EOU), notes that assessee’s unit was admittedly in the DTA, observes that among the illustrations contained in the circular, illustration no. 2 is the closest to the facts of the present case, in view of which deduction is not allowable to assessee; Rejects assessee’s contention that provision in the Circular (which says that benefit would not be available beyond 2009-10 where there is a subsequent emergence of a 100 % EOU), is ultra vires to Sec. 10B proviso which purports to limit the right to claim the benefit upto the year 2012, holds that the circular must be appreciated in the context of the question which fell for consideration; Lastly, HC rejects assessee’s stand that if Revenue’s interpretation is accepted, then obtaining status of a 100% EOU is redundant and a futile exercise, re-iterates that “merely obtaining the status of a 100% EOU cannot clothe the assessee with the right to claim benefit of deduction beyond 10 years”; However, remits matter back to AO to examine assessee’s claim u/s. 80IC, distinguishes assessee’s reliance on SC ruling in Yokogawa wherein the issue was what would be the stage of deduction:HC
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